1. 1 Investment and Financial Flows to Address Climate Change ecbi 2008 Oxford Fellowships Oxford September 3, 2008 Erik Haites Margaree Consultants Inc.

2. MARGAREE2 Investment & Finance Needs UNFCCC, Investment and Financial Flows to Address Climate Change, 2007 Change in flows needed to reduce 2030 global emissions 25% below 2000 Energy scenario is IEA WEO 2006 with BAPS as mitigation scenario Other scenarios for remaining gases, sources and for adaptation Annual investment in 2030 in billion 2005 USD

3. MARGAREE3 Energy Supply Investment

4. MARGAREE4 Other Mitigation Investments

5. MARGAREE5 Adaptation Investments

6. MARGAREE6 Current Global Investment SourceShareRange HouseholdsTotal investment26%15 to 30 CorporationsTotal investment 60%55 to 75 Domestic funds 21%15 to 65 FDI 22%0 to 30 Foreign debt 17%0 to 30 GovernmentTotal investment 14%10 to 25 Domestic funds 12%0 to 25 Foreign debt 1%0 to 10 ODA 0%0 to 6 TotalTotal investment100% Domestic funds 60%35 to 100 FDI 22%5 to 45 Foreign debt 18%0 to 35 ODA 0%0 to 6 Global investment in 2000 = US$6,875 billion = 2005 US$7,750 billion

7. MARGAREE7 Summary of Changes Amounts large in absolute terms, but small relative to GDP, total investment Need substantial shifts in investment for mitigation as well as overall increase for mitigation and adaptation Substantial share in developing countries; lowest cost reductions there Policies will be needed to influence private investment because it dominates the total

8. MARGAREE8 Existing Funding for Climate Existing funding to address climate change in developing countries: GEF ≈ $250 million/yr; mainly mitigation SCCF and LDCF <$300 million total; mainly adaptation Adaptation Fund <$300 million/yr; adaptation CDM investment in new mitigation projects more than $7 billion/yr Existing sources clearly inadequate to meet developing country needs

9. MARGAREE9 Funding for Mitigation National policies for electricity sector and energy efficiency in all sectors More stringent commitments can increase investment for renewables, non-CO 2 gas reductions by >$25 billion/yr under CDM Funds for large options with significantly different costs; REDD and CCS

10. MARGAREE10 Adaptation and Technology National policies to build infrastructure and develop economy suitable for future climate Need multi billion dollars per year of international funding for publicly funded adaptation in developing countries Need some money for technology R&D, diffusion in developing countries and technology transfer not met by mitigation

11. MARGAREE11 Possible New Sources of Funds More money from developed country budgets: AOSIS – mandatory contributions China – 0.5% of GDP Germany/EU – share of revenue from auction of domestic allowances Mexico – defined scale of contributions Switzerland – harmonized CO 2 tax More bilateral, multilateral funds; Japan, US, UK

12. MARGAREE12 Possible New Sources of Funds Money from more stringent commitments: Korea – deeper commitments to create market for credits from nationally appropriate mitigation actions (NAMAs) Norway – auction a share of assigned amount Other sources of funds: Levy on air fares Levy, auctioned allowances for emissions from international aviation/shipping Several others

13. MARGAREE13 Challenges Need sources that raise enough money; China, Norway, Swiss tax, air levy, bunkers; some others unknown Assess feasibility of sources to provide funds on a sustained, predictable basis Match sources with needs; adaptation needs the most money

14. MARGAREE14 Summary Post-2012 agreement will require more action on mitigation, adaptation, technology Action will require national policies, more CDM, and much more money for DCs Several potential sources able to generate enough money; need to agree on one or more to get sustained, predictable funding Governance, delivery need to be addressed